The Relevance Of Hamiltonian Economics Today

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The Relevance of Hamiltonian Economics Today Alexander Hamilton set the economic precedent for the future with his thoughts on the Government 's role in managing debt and the economy in constitutional America. Alexander Hamilton 's voices his plea for a National bank in his persuasive essay “For the Banks” (See Document 1), stressing that it was essential in post-Revolutionary America. Hamilton and his party thought a large federal government was necessary due to the flaws they noticed in the Articles of Confederation culminating in Shay’s rebellion. As Zinn says
“By 1787 there was not only a positive need for strong central government to protect the large economic interests, but also immediate fear of rebellion by discontented farmers.
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These debts threatened to pull the union apart, as the United States had stopped paying the principal and interests on the loans from the French and the Dutch banks in 1786. Hamilton cites the Bank as the way to pay off the war debts. He says, “A bank has a direct relation to the power of borrowing money, because it is a usual and in sudden emergencies an essential”. (Document 1) Hamilton 's reasoning for the necessity held up in congress and the bank was instituted under Washington. The Bank would work by “setting up a partnership between the government and certain banking interests.” (101). Hamilton wanted to use the British system of war bonds for the bank, a system he alleges allowed the British to wage war against the stronger and wealthier French government. The new bank, Hamilton proposed, would be 20% public and 80% private with bonds selling at $400 each. However, the foreign loans were the real scare for the United States. The debate over these loans led to a “quasi-war” with the French in 1792 referencing the XYZ affair. Hamilton mentions in his recommendation for the Bank (Document 1) the necessity of instant cash and fluidity of funds. The National Bank provided a standardized
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